The boom in lithium iron phosphate (LFP) batteries is likely to continue as policymakers dissuade the burning of fossil fuels as an energy source, or outright ban it, in some cases.
The banning of the sale of combustion engines within a decade means a policy-driven shift in the demand for LFP batteries.
“The boom in lithium iron phosphate (LFP) batteries is likely to continue”
LFP batteries market growth
LFP batteries are anticipated to grow approximately 400 % in a decade if the trajectory of FFP batteries, as a preferred power source for EVs continues.
In 2022, the global LFP battery market stood at $12.5 billion. By 2030, this figure is expected to catapult to nearly $52.7 billion.
Moreover, within the next decade, LFP batteries could account for 40% of all batteries, according to a UBS report.
So the stars are aligning for LFP batteries technology to play a leading role in the future of battery power. The transition of the ICE engine to non-fossil fuel energy is underway, and the digitalisation of everything including central bank digital currency could all provide strong tailwinds for LFP batteries. The EU is passing a law which will make smartphone manufacturers build their devices with easy battery replacement solutions. The lifecycle of EVS will require at least three battery swaps.
In short, demand for LFP batteries could surprise to the upside.
“within the next decade, LFP batteries could account for 40% of all batteries, according to a UBS report”
LFP batteries investment opportunities
The lithium iron phosphate battery (LiFePO 4 battery) or LFP battery (lithium ferrophosphate) is a type of lithium-ion battery using lithium iron phosphate (LiFePO.
So three identified elements, lithium, iron and phosphate make up LFP batteries.
Rising demand for LFP batteries could also propel the demand for raw elements. The two metals lithium and iron are already seeing investor capital flows as long-term investors position themselves to ride the LFP batteries macro wave.
But less is known about phosphate, the non-metal mineral acid with an energy transfer and storage function.
“Even in developed economies, like Canada, a third of the population now relies on government assistance for necessities” – Win Investing
LFP batteries boom and global food insecurity
Phosphate boom driven by LFP batteries could worsen food hyperinflation
Phosphate, this miracle non-metal mineral acid, is also used to create synthetic fertilizer which assists food production for an estimated 48% of the world’s population.
Think about that. Policymakers are directing the flow of a vital food production element, phosphate, into green battery technologies to the detriment of global food production.
Even in developed economies, like Canada, a third of the population now relies on government assistance for necessities. In broken Britain, those at the bottom of the food chain are left with two stark options: heat or eat.
In poor countries, where doing well means eating two meals a day, a 30% food hike due to higher fertilizer costs, equals famine for the majority of the global poor.
LFP batteries, political fallout.
So maybe that is why the mainstream doesn’t talk about the future green LFP battery source gobbling phosphate.
Scarce resources tend to go to the highest bidder producing higher-end value. In short, food production prices for fertilizer could go sky-high as they compete for supplies with future manufacturers of energy storage.
In other words, we could see more disruption to the food supply as farmers with already squeezed profit margins go bankrupt.
Let’s spell this out; Policy-driven pushes towards mass electrification powered by LFP batteries will directly reduce carbon emissions and also indirectly the foot. Could the green agenda’s sinister side be a Darwinian policy to reduce the population size to keep planet Earth inhabitable by humans?
“Lithium and phosphate, like most energy sources, are volatile and highly combustible” – Win Investing
LFP batteries, the next Saudi Arabia.
If the rise of crude oil last century transformed Saudi Arabia from poor desert peoples into a tower of wealth and a significant sovereign wealth fund ,then could the major suppliers of lithium, iron and phosphate be the Saudi Arabia of the 21st century?
Most global phosphate reserves are in Morocco, which accounts for 70% of the total reserves or 50 billion tons.
Morocco is also the second-largest producer, with most of the production coming from the Bou Craa mine in Western Sahara.
So Morocco remains the largest exporter of phosphate, but the high cost of mining and threats of war has derailed the production of phosphate in the country.
Phosphate rocks are mined using split technology. However, a significant amount of deposits in countries such as China and Russia are extracted by underground mining. In 2017, the US Geological Survey estimated that the phosphate reserves around the world amounted to approximately 68 billion metric tons.
China is a distant second with 5% of the total reserves, translating to approximately 3.1 billion tons.
China remains the largest producer of phosphate at 138 million metric tons. If China maintains the current production rate, its phosphate reserve will be exhausted by the next 35 years.
Syria and Algeria have the third-largest phosphate reserves in the world. Both countries account for 3% of the world’s phosphate reserves each, translating to approximately 1.8 and 2.2 billion metric tons respectively.
Market Share of LFP Batteries
The Asia Pacific region dominated the LFP battery market in 2021, accounting for over 34% of the global share. Asia Pacific 34%;
North America 29%; Europe 23%; Latin America 10%; MEA 4%.
Meanwhile, North America, with the second largest share, is projected to witness ongoing growth through 2030.
First Phosphate holds access to 1% of the world’s purest igneous rock phosphate reserves in Québec, making it an ideal supplier for the growing LFP market.
LFP batteries, safety concerns.
Lithium and phosphate, like most energy sources, are volatile and highly combustible.
It is not just electric vehicles and buses that are self-combusting E-bikes and have also had their share of fires.
LFP batteries are considered safer by EV makers, which is why LFP batteries are a preferred power choice.